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Life insurance’s main purpose is to financially protect your family. No matter what your coverage needs may calculate out to be—buy what you can afford. A little life insurance is better than no life insurance. The worst thing that could happen is that you purchase a policy you cannot afford to keep active, let it terminate, and then need it.

Just keep that in mind as we continue talking about how much life insurance coverage you need.

How much term life insurance do I need? Quickly calculate it for me, please.

It you’re asking how much life insurance coverage you need, our free life insurance needs calculator can help you determine how much coverage to buy by answering three simple questions.

  1. How much debt do I want paid off?
  2. How much monthly income do my loved ones need?
  3. How many years do my loved ones need to replace my income?

By playing with the sliders in our needs analysis calculator, you can narrow down how much coverage you may need. A one million dollar life insurance policy isn’t unheard of, but there are many coverage amounts to choose from.

Then you can head right into our policy quoting tool (it’s free and you can get as many quotes as you wish without disclosing any personal contact info) to see how much that life insurance policy will cost you per month.

The answer to that million dollar question might surprise you! It’s most likely a lot less than you think. And, there’s no price you can put on having peace of mind that your loved ones would be taken care of should the unspeakable happen to you.

Life insurance is one of the most important purchases you can make for your loved ones, and it’s understandable that you might worry about choosing the right amount. Quotacy can help. By answering three simple questions, you’ll have a better understanding about how much life insurance coverage you should own.

Ready to test drive our life insurance needs calculator? Great! Jump right in:

» Calculate: Life insurance needs calculator

Or, continue reading to get the full scoop on calculating how much life insurance coverage you need below.

How much term life insurance do I need? I want to read the full story and calculate it myself.

Term life insurance is the most affordable and straight-forward type of life insurance. It provides coverage at a fixed rate of payments for a specific period of time. The typical terms are coverage lengths of 10, 20, or 30 years, whichever makes the most sense for your individual situation. If you die within the term, your beneficiaries receive the death benefit amount to help replace your income.

What is your current gross annual income?

This question refers to you alone, not the total household income. Life insurance is designed to replace the income of the person who is insured. We recommend having enough coverage that amounts to at least 10 years’ worth of your income.

Example: Let’s say your annual gross income is $50,000. This starts us off with a $500,000 policy.

Life insurance is designed to replace the income of the person who is insured.  We recommend having enough coverage that amounts to at least 10 years’ worth of your income.

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How many children do you have under the age of 25? What level of college would you like to pay for your children?

These questions allow you to plan for financially dependent children and college funds. If you plan on paying for your children’s college tuition, these costs will also factor in to your life insurance coverage. Whether the colleges you had in mind were public or private also makes a difference when calculating coverage.

Example: Let’s say you have one child and want to be sure to cover the tuition of the local public university. Four years at a public university is about $48,000 so now we’re looking at needing $548,000.

How much do you owe for your current mortgage?

Paying off your mortgage is essential in planning for the unexpected. By knowing how much you owe on your mortgage, you can include this in your coverage amount as well so you do not leave your spouse or partner with the responsibility of paying off the principal balance by him or herself.

Example: Let’s say you owe $120,000 on your mortgage loan. Adding that to the coverage amount, we’re now at $668,000.

How much do you currently have in savings?

Your cash savings, retirement plans, bank accounts, etc. can help reduce the amount of life insurance your loved ones will need to maintain their current standard of living.

Example: Let’s say with your checking, savings, and retirement accounts you have $100,000 in assets. You can subtract this so you are now looking at needing $568,000.

Following the hypothetical examples, you may need a life insurance policy that will leave about $600,000 behind to your loved ones (averaging and adding in final expenses such as a funeral and burial.) A healthy 30-year old man could get a $600,000 20-year term policy for as little as $24 a month.

Keep in mind, these examples are not one-size-fits-all. Everyone’s situation is different, so you may need less or more coverage.

When you run a term life insurance quote at Quotacy, you don’t need to give up any contact information to see pricing. Window shop in peace without having to worry about filling out a contact form and getting non-stop sales calls.

Quotacy agents are not paid on commission. We work to get the policy that is best for you, not the one that costs the most. More than 40 percent of Americans have no life insurance; let us help you not be part of these statistics.

» Learn more: How Long Should Term Insurance Last?

 

About the writer

Headshot of Natasha Cornelius, a life insurance writer, for Quotacy, Inc.

Natasha Cornelius

Writer, Editor, and Co-host of Quotacy's Q&A Fridays

Natasha is the content manager and editor for Quotacy. She has been in the life insurance industry since 2010 and has been making life insurance easier to understand with her writing since 2014. When not at work, she's probably studying and working toward her Chartered Life Underwriter (CLU) designation while throwing a tennis ball for her pitbull mix, Emmett, or curled up on her couch watching Netflix. If it’s football season, the Packers game will be on. Connect with her on LinkedIn.

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